LONDON (Reuters) - Israel's parliament approving a new government marks the end of a protracted political deadlock and will allow for the passage of a new budget - a positive for the country's credit rating, ratings agency Moody's (NYSE:MCO) said on Monday.
On Sunday, parliament approved by a razor-thin majority of 60-59 a new administration led by Naftali Bennett, bringing Benjamin Netanyahu's 12 years in office to an end.
"Although this is likely to result in a fragile and potentially short-lived government, we expect the lack of ideological cohesion to increase incentives to focus primarily on economic policies rather than more divisive issues," Moody's analysts said in a research note.
"The passage of a new budget will be key to gaining greater visibility on the medium-term fiscal policy outlook after the weakening we have observed in Israel's fiscal policy effectiveness in recent years, in part because of the polarised political environment."
Moody's rates Israel at A1 with a stable outlook.